Annual Report 2022

2 Governance framework for compensation

2.1 Involvement of the shareholders

Over the past few years, the shareholders have played an increasingly important role in matters relating to compensation. In particular, the General Meeting approves the Articles of Association and their compensation-related provisions. These are available here and cover the following:

Although not required by provisions of the Articles of Association, the Board of Directors also submits the Compensation Report to the Annual General Meeting each year for a consultative vote.

The following chart illustrates how the General Meeting (GM) exerts its “say on pay”:

2.2 Compensation Committee

2.2.1 Organization and tasks

The Compensation Committee consists of three members of the Board of Directors. The General Meeting individually elects the members of the Compensation Committee for the term of office until the conclusion of the next Annual General Meeting. In its function as the Human Resources Committee, the Compensation Committee also assumes other responsibilities. At the Annual General Meeting on April 26, 2022, Urs Riedener (Chairman), Robert F. Spoerry, and Dr. Heinz O. Baumgartner were elected to the Compensation Committee.

The Compensation Committee convenes as often as business requires, but at least three times a year. The tasks and responsibilities of the Compensation Committee comprise the following:

As a general rule, the CEO and the Chief Human Resources Officer (CHRO) of the Group are invited to join the meetings of the Compensation Committee in an advisory capacity. The Committee Chairman may also invite other individuals as appropriate. The CEO does not attend the meeting when his own compensation is the subject of deliberation.

After each meeting, the Chairman of the Compensation Committee reports to the Board of Directors on the activities of the committee. The minutes of the committee meetings are made available to all members of the Board of Directors.

The following table summarizes the decision-making powers for the most important compensation-related topics as stipulated by the Articles of Association and the Organizational Regulations of Bystronic AG:

Decision-making powers

CEO

 

Compensation Committee

 

Board of Directors

 

Annual General Meeting

 

Topic

 

 

 

 

 

 

 

 

Compensation policy

 

 

proposes

 

approves

 

 

 

Maximum total compensation and benefits of the Board of Directors

 

 

proposes

 

proposes

 

approves (binding vote)

 

Individual compensation of the members of the Board of Directors

 

 

proposes

 

approves

 

 

 

Maximum total compensation and benefits of the Executive Committee

 

 

proposes

 

proposes

 

approves (binding vote)

 

Individual compensation and terms of employment of the CEO

 

 

proposes

 

approves

 

 

 

Individual compensation and terms of employment of the members of the Executive Committee

proposes

 

proposes

 

approves

 

 

 

Compensation Report

 

 

proposes

 

approves

 

approves (consultative vote)

 

The approval of the actual compensation of the Board of Directors and the Executive Committee within the limits of the maximum compensation approved by the General Meeting is the responsibility of the Board of Directors.

2.2.2 Focus topics in the reporting year

In the reporting year, the Compensation Committee held five meetings in accordance with a predefined annual schedule focusing on the following topics:

Review of the compensation strategy, policy, and governance

Motion to the Board of Directors on the compensation policy for members of the Board of Directors and of the Executive Committee

Development of a new Long-Term Incentive Plan for the members of the Executive Committee and Extended Executive Committee; see also Section 7 Outlook

Review and adaptation of the compensation system for the Executive Committee, focusing on the compensation mix and the alignment with environmental, social, and governance (ESG) criteria

Preparation of motions to the Annual General Meeting on the maximum total compensation and benefits of the Board of Directors and Executive Committee for the attention of the Board of Directors

Preparation of the Compensation Report for approval by the members of the Board of Directors

Compensation of the Board of Directors

Proposal of compensation for the next term of office

Compensation of the Executive Committee

Determination of management KPIs and objectives

Review and assessment of performance targets, performance assessment, and target compensation

Benchmark studies related to the compensation mix

Additional information about the tasks and activities of the Human Resources Committee/Compensation Committee are described in the Corporate Governance Report, Section 3.5 “Organization and definition of areas of responsibility” and in the “Human Resources Committee Report”.

3 Compensation system and elements 1 Compensation at a glance